Ryanair lifts profits, says high oil costs to ground planes

May 23, 2011
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, DUBLIN, May 23 – Ryanair said on Monday that its annual net profit rose by a quarter but Europe\’s biggest no-frills airline also warned of a tough outlook as high fuel costs force it to ground planes and hike fares.

Ryanair chief executive Michael O\’Leary predicted there would be no large-scale closure of airspace as volcanic ash from Iceland drifts towards Britain.

The Dublin-based carrier said profit after tax jumped 26 percent to 401 million euros ($575 million) in the year to end of March compared with 2009/10, as passenger traffic grew by eight percent and fares rose 12 percent.

O\’Leary said the results were pleasing amid "higher oil prices, the global recession, and volcanic ash disruptions".

The airline said it would ground 80 aircraft during the European winter, compared with 40 in 2009/10, in a bid to reduce costs.

"Higher oil prices next winter, and the refusal of some airports to offer lower charges, makes it more profitable to tactically ground up to 80 aircraft," Ryanair said in its earnings statement.

Although the airline has hedged most of its fuel costs it said the overall economic outlook might dampen the travel market and was forecasting just four percent traffic growth in its current financial year.

Ryanair plans to hike its fares by 12 percent in 2010/11.

The company\’s results come as airlines face the threat of further flight cancellations caused by volcanic eruptions in Iceland.

France\’s junior transport secretary Thierry Mariani warned on Monday that flights would be cancelled if an ash cloud from Iceland\’s Grimsvoetn volcano blew over Europe, sending airline shares tumbling.

Air safety officials said ash from the Grimsvoetn eruption may reach north Scotland by Tuesday before sweeping across Britain to hit France and Spain two days later.

But O\’Leary said the impact should not be as far-reaching as 2010, when a similar event caused widespread flight cancellations.

The Ryanair boss said the aviation authorities were better prepared this time, and they were prepared to leave the decision to ground planes largely in the hands of airlines.

"What they tend to do is to let the airlines continue to fly. We do inspections every time there is a landing," O\’Leary told BBC radio.

"If we notice any dust on the aircraft then we take appropriate procedures.

"But there is no ash cloud by the time it gets to the UK or to continental Europe, the thing is dispersed — that was our experience last time, and I think the widescale airspace shutdowns won\’t be repeated," he added.

Last year\’s closure cost Ryanair nearly 30 million euros as it cancelled 9,400 flights, the Irish airline said in its earnings statement on Monday.

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